How You Should View Family Caregiving
Doesn’t it make sense for a family member to care for a senior who needs help at home, rather than paying someone else or an agency? Or uprooting the senior into an institution? The family member can pay the bills, balance the checkbook, keep the house clean, shop and make meals, and take the senior on outings and to the doctor. The senior stays in familiar and companionable surroundings, the family is confident the senior is getting the care and attention he needs, and the family member can even be paid, so she doesn’t give away for free her worthy time and labor.
If only things were so simple.
Recently in New Jersey, a daughter, J.W., quit her job to care for E.B., her mother. But when E.B. fell and needed nursing-home care, the caregiving arrangement ended up costing them nearly $70,000.00 in lost Medicaid benefits.
A court was sympathetic but was still unable to help. The judge understood the appeal that E.B. “may as well pay [J.W.] rather than a third party to provide companion services, especially because J.W. is a family member and would have her best interests in mind.” Nevertheless, the court ruled that J.W. had failed to document her hours and services with a contract as the law requires. Without that proof, the court found that J.W. should have returned to work instead, where she would have earned more and, thus, have been able to afford to hire an agency. Without the required proof, the inference remained that mother and daughter had entered into the caregiving arrangement only to give money to J.W.
The Medicaid rules strictly penalize what can be characterized as gift-giving, even in a case like E.B.’s. Money or property must not be given away within five years of a senior needing assistance, from Medicaid, to pay for the extremely high cost of nursing-home care.
Even if J.W. had treated caregiving just like any other job, and if she had documented her work as the law requires – that is, if she and her mother had signed an employment contract specifying working hours and services provided, and J.W. had logged her hours as the law also requires – payment under a caregiver agreement must also be reported to the IRS for income tax purposes, or risk stiff penalties.
There is also a risk that a caregiver could be injured on the job. Worker’s compensation insurance would be a good idea.
How the caregiver is paid is important. It may not be possible to pay a caregiver a lump sum of money, and instead should only involve an hourly payment arrangement. The hourly rate must match the type of care being provided, and the experience level of the caregiver.
A family caregiving arrangement can work, but it is subject to a lot of “ifs”: If the caregiver is up to the hard work it takes, if the caregiving arrangement is properly contracted-for and logged and documented, and if taxes on the compensation are properly paid. If your family member treats caregiving like any other employer-employee relationship, the arrangement can be rewarding. But the record-keeping and documentation can be tricky, and mistakes can be very expensive in the long run.
If all that sounds like more than you’re willing to take on, but you still want the worthy benefits of family caregiving, please contact us for help with the details. You can reach Drescher & Cheslow at any of our three locations by dialing (732) 972-1600.